Self-Invested Personal Pension tax relief

One of the most tax-efficient ways of saving for retirement

Self-Invested Personal Pensions are one of the most tax-efficient ways of saving for retirement, and you can invest up to the annual allowance for tax relievable pension contributions (currently £40,000). As always, please bear in mind that tax relief will depend on your individual circumstances, and tax laws may change.

Effectively, whenever you contribute into a pension, the Government will give you tax relief calculated on your gross contributions based on the tax band you are in. Each tax band will get a different percentage, but it is a great boost to help you save for the future.

Non-taxpayer: You are entitled to 20% tax relief on £3,600. Therefore, you can contribute up to £2,880 into the SIPP.

Basic-rate taxpayer: You are entitled to 20% tax relief which is added to your pension pot.

Higher-rate taxpayer: You are entitled to 40% tax relief. Your SIPP will claim 20% and add this to your pension pot, but you will need to claim the further 20% through your tax return. The tax relief claimed from your tax return will not be automatically added to your SIPP.

Additional-rate taxpayer: You are entitled to 45% tax relief. Your SIPP will claim 20% and add this to your pension pot, but you will need to claim the further 25% through your tax return. Tax relief claimed from your tax return won’t be automatically added to your SIPP.

Non-taxpayer: Even if you don’t pay Income Tax, you’re still entitled to tax relief at the same rate as a basic-rate taxpayer. The maximum you can claim relief on is £2,880 per tax year. If you contribute £2,880, you’ll receive £720 tax relief, making the overall contribution into your SIPP £3,600.